An indication for the improvement of cognition in patients with schizophrenia is likely to require demonstration not only of improvement on cognitive tests, but also demonstration that these cognitive changes are clinically meaningful (Buchanan et al., 2005). Real-world functional change is considered to be too high a threshold for registration since outcomes such as employment, independent living, and social relationships are likely to require more time to change than the duration of a typical clinical trial. Further, real-world functional change appears to be dependent upon a variety of circumstances unrelated to treatment, such as whether a patient is receiving disability payments (Rosenheck et al, 2005). For these reasons, FDA representatives have stated that the meaningfulness of cognitive change can be demonstrated with the use of co-primary measures such as tests of functional capacity. However, there are no standard measures of functional capacity. In fact, the recent MATRICS Project concluded that while some available measures held promise as co-primary measures, there were not sufficient data to support the recommendation of any single instrument, and that all currently available instruments had considerable weaknesses (Green et al, in press). Therefore, we propose an SBIR project devoted to the development and validation of computer-based, virtual-reality measures of functional capacity that would be used as co-primary measures in clinical trials of cognitive enhancement in schizophrenia. These measures will assess cognitive function using realistic environments that simulate daily activities. Examples of these activities are presented in the scenario described within the document, along with the respective domains of cognitive function. Measures of cognitive function will be primarily based on error rates and times to completion for each of the assessment activities. All data regarding cognitive scores will be transferred to a central Web server, using standards compliant with both HIPAA and FDA regulations. A library with different scenarios and difficulty levels will be available so that learning effects as well as ceiling and floor effects are diminished. Finally, the measure will be culturally sensitive, allowing for use not only with minority subjects in the United States whose first language is not English, but also with study subjects from other countries participating in international trials. PUBLIC HEALTH RELEVANCE: Schizophrenia is characterized by a diverse array of symptoms, including cognitive deficits which usually accompany (Saykin et al. 1994) or precede (Fuller et al. 2002;Hawkins et al. 2004) the onset of psychosis, and remain throughout the course of illness (Green and Braff 2001;Heinrichs and Zakzanis 1998;Bilder et al. 2000). Unfortunately, while current antipsychotic treatments control the delusions and hallucinations found in people with schizophrenia, these drugs are unable to provide more than minimal cognitive benefit (Harvey and Keefe 2001;Keefe et al. 1999;Woodward et al. 2005;Keefe et al. 2007). A computerized interactive assessment of functional skills, as proposed here, promises to provide pharmaceutical companies with better information regarding patients'real-world functioning so that compounds targeting this improvement can be developed.